By Namit Jain, Founder and CEO, Zen Mobility
The world’s leading city logistics companies have a new mission: to reduce all logistics-related emissions to zero by 2050. Their rich expertise, vast resources and innovative ideas will help make this bold vision a reality. To achieve this goal, green logistics solutions should be implemented and the majority (at least 70%) of first and last mile services will have to operate with clean pick-up and delivery solutions, such as cargo bikes, e-cargo vans and MPEVs (multi-purpose electric vehicles)
In 2021, the global last mile delivery (LMD) market was valued at $40.5 billion, with the anticipation that it would generate a value of over $150 billion by 2030; the market is therefore expected to grow at a CAGR of approximately 90% from 2021 to 2030.
Last Mile Delivery: An Unprecedented Growth Story
In the context of supply chain management and transportation planning, LMD is the transit of goods from a central hub or last mile to the final delivery destination, usually to the customers doorstep. . Since the pandemic, the demand for parcel delivery has grown exponentially and unprecedentedly across the world, as increasing numbers of people find shopping online safer and more convenient. There was, of course, a particular push from the millennial crowd, who are happy to adapt quickly to any situation.
According to a McKinsey study, in the quarter of the outbreak of the pandemic, the LMD segment had expanded to match the rough growth anticipation of more than ten years. Since the goal of city logistics should be to ensure increased efficiency at minimal costs, a global retail supply chain survey found that reducing costs while simultaneously improving profit margins was the primary concern of LMD business owners.
The transition to green logistics solutions
Amid all this expansion news, electric vehicle fleets are replacing ICE vehicles to keep up with the sudden growth spurt in the wake of the pandemic; this is directly proportional to the rapid growth of the LMD segment, among others in the transport and logistics supply chain sector. This rise in demand for LMD is as much related to the rise of e-commerce as it is to the growing demand for capital investment and other factors. Recently, a report by Niti Aayog indicates that our gig economy could triple to 23.5 million by FY30 from 7.7 million for FY21. This translates directly into a future requirement for new fleets of freight vehicles and a corresponding number of drivers/passengers to transport them.
Why EV is the smarter choice
Electric vehicles appear to be the perfect choice for these planned LMD fleets, for several reasons. The absence of fuel consumption by electric vehicles makes excessive fuel requirements unnecessary, as well as high operating costs, which makes logistics comparatively more cost-effective than before. Throughout the life cycle of the fleet, this translates into substantial savings. Thus, it directly contributes to making fleets more convenient to operate and extremely easy to maintain. Charging is the only input required for EVs and once charged most EVs last up to 10 hours of operation while providing a range of 80-100 km which is more than enough for deliveries of the “last mile” which are generally carried out within a radius of 15 to 20 km from the last mile hub and require a range of 50 to 60 km in urban areas.
Moreover, all that is required is the maintenance or replacement of the battery in a few years. Thus, electric vehicle fleets in LMD also offer huge time savings as there is no waiting required at gas stations and charging can be done at leisure, even at home. All of these factors not only make electric vehicle fleets sustainable with a zero to low carbon footprint, but they also significantly reduce the total cost of ownership (TCO) of these vehicles. And that’s not all either.
There is always innovation happening all the time in areas that look at new technologies such as fuel cells in electric vehicles. With these, owning electric vehicle fleets in LMD will only become more lucrative. To top it off, in India, the government has great support through helpful initiatives to make this transition even more desirable. This encouragement is not the global norm, so the LMD and related sectors are very lucky to have our government on our side.
Electric vehicles are undoubtedly the future of city logistics – the sooner the transition is made, the sooner all stakeholders involved will start reaping the not only efficient but also sustainable benefits.